Does Privatized Health Insurance Benefit Patients or Producers? Evidence from Medicare Advantage

Cabral, Marika; Geruso, Michael; Mahoney, Neale

doi:10.2139/ssrn.2489999

Cited by 44 publications

(46 citation statements)

References 2 publications

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“…This literature explores the pass-through of input or output tariffs (De Loecker, Goldberg, Khandelwal, and Pavcnik, Forthcoming), exchange rates (Goldberg and Hellerstein, 2008;Gopinath, Gourinchas, Hsieh, and Li, 2011;Campa and Goldberg, 2005), sales taxes (Poterba, 1996;Marion and Muehlegger, 2011), healthcare capitation payments (Cabral, Geruso, and Mahoney, 2015;Duggan, Starc, and Vabson, 2014), and minimum wage laws (Harasztosi and Lindner, 2015). To the best of our knowledge, no literature estimates marginal cost pass-through in U.S. manufacturing, a parameter which is a necessary ingredient for characterizing the incidence of input taxes levied on U.S. manufacturers.…”

Section: Introductionmentioning

confidence: 99%

Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing

2016

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I EIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. This paper studies how increases in energy input costs for production are split between consumers and producers via changes in product prices (i.e., pass-through). We show that in markets characterized by imperfect competition, marginal cost pass-through, a demand elasticity, and a price-cost markup are sufficient to characterize the relative change in welfare between producers and consumers due to a change in input costs. We find that increases in energy prices lead to higher plant-level marginal costs and output prices but lower markups. This suggests that marginal cost pass-through is incomplete, with estimates centered around 0.7. Our confidence intervals reject both zero pass-through and complete pass-through. We find heterogeneous incidence of changes in input prices across industries, with consumers bearing a smaller share of the burden than standards methods suggest.JEL Classification: L11, H22, H23, Q40, Q54

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Section: Introductionmentioning

confidence: 99%

Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing

2016

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“…Lustig (2011) studies adverse selection and imperfect competition in MA, and Starc (2014) investigates the impact of pricing regulations in Medicare supplement insurance. Recently, Cabral et al (2014), Duggan et al (2014), and Curto et al (2014) study the impact of capitation payments in MA markets. Especially, Curto et al (2014) use Medicare administrative records, which contain richer information about individual characteristics than we have available and which cover more recent years when capitation payment were adjusted more to variation in expected medical expenditures.…”

Section: Introductionmentioning

confidence: 99%

Advertising and Risk Selection in Health Insurance Markets

Aizawa

Kim

2015

FEDS

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We study impacts of advertising as a channel of risk selection in Medicare Advantage. We show evidence that both mass and direct mail advertising are targeted to achieve risk selection. We develop and estimate an equilibrium model of Medicare Advantage with advertising to understand its equilibrium impacts. We find that advertising attracts the healthy more than the unhealthy. Moreover, shutting down advertising increases premiums by up to 40% for insurers that advertised by worsening their risk pools, which further reduces the demand of the unhealthy. We argue that risk selection may make consumers better off by improving insurers' risk pools.

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“…The portion of the subsidy that is passed through to consumers rather than extracted by producers (including insurers and health care providers) depends on the level of competition in the market. In the private Medicare Advantage context, on average about half of the dollar value of marginal changes in direct-toplan subsidies are passed through to consumers in the form of lower premiums or lower cost sharing in a typical market (Curto, Einav, Levin, and Bhattacharya 2014;Song, Landrum, and Chernow 2013), with the largest pass-through rates in the most competitive local markets (Cabral, Geruso, and Mahoney 2014). These results suggest that market structure can have important effects on the consequences of a preset premium subsidy.…”

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confidence: 99%

Selection in Health Insurance Markets and Its Policy Remedies

Geruso

Layton

2017

Journal of Economic Perspectives

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Selection (adverse or advantageous) is the central problem that inhibits the smooth, efficient functioning of competitive health insurance markets. Even-and perhaps especially-when consumers are well-informed decision makers and insurance markets are highly competitive and offer choice, such markets may function inefficiently due to risk selection. Selection can cause markets to unravel with skyrocketing premiums and can cause consumers to be under-or overinsured. In its simplest form, adverse selection arises due to the tendency of those who expect to incur high health care costs in the future to be the most motivated purchasers. The costlier enrollees are more likely to become insured rather than to remain uninsured, and conditional on having health insurance, the costlier enrollees sort themselves to the more generous plans in the choice set. These dual problems represent the primary concerns for policymakers designing regulations for health insurance markets.In practice, identifying selection problems and designing policy responses is not always straightforward. A natural starting point for uncovering selection distortions is a comparison of the chronic health conditions of consumers who elect more-versus less-generous insurance. However, selection can play out in complex ways that extend beyond issues of who remains uninsured and who chooses which plan.

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Does Privatized Health Insurance Benefit Patients or Producers? Evidence from Medicare Advantage

Cited by 44 publications

References 2 publications

Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing

Energy Prices, Pass-Through, and Incidence in U.S. Manufacturing

Advertising and Risk Selection in Health Insurance Markets

Selection in Health Insurance Markets and Its Policy Remedies

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